Microeconomics

Front 1

every firm must share two things with all other firms,

Back 1

first:

Answer certain questions:1- what price should the firm charge for the goods it produces and sells? 2- How many units of the good should the firm produce? 3- how much of the resources that the firm needs to produce its good should it buy?

Second:

every firm finds itself operating in a certain market structure.

Front 2

market structure

Back 2

The environment of a firm, whose characteristics influence the firm's pricing and output decisions

Front 3

the perfect competition

Back 3

a theory of market structure based on 4 assumptions: 1- there are many sellers and buyers 2- sellers sell a homogeneous good 3- buyers and sellers have all relevant information 4- entry into or exit from the market is easy

Front 4

price taker

Back 4

which is the seller that does not have the ability to control the price of its product

Front 5

marginal revenue (MR)

Back 5

is the change in total revenue (TR) that results from selling one additional unit of output(Q)

Front 6

if the price is equal to marginal revenue

Back 6

the marginal revenue curve for the perfectly competitive firm is the same as its demand curve

Front 7

a market that does not exactly meet the assumptions of perfect competition may nonetheless approximate the assumptions to a degree that ir behaves

Back 7

as if it were a perfectly competitive market

Front 8

the firm would continue to increase its quantity of output as long as marginal revenue is greater than marginal cost

Back 8

the firm will stop increasing its quantity of output when marginal revenue and marginal cost are equal

Front 9

profit maximization rule

Back 9

profits is maximized by producing the quantity of output at which MR=MC

Marginal revenue = Marginal cost

Front 10

resource allocative efficiency

Back 10

the situation when firms produce the quantity of output at which price equals marginal cost: P=MC

Front 11

short-run (firm) supply curve

Back 11

the portion of the firm's marginal cost curve that lies above the average variable curve

Front 12

short-run market (industry) supply curve

Back 12

the horizontal addition of all existing firms' short-run supply curves

Front 13

long-Run Competitive Equilibrium

Back 13

The condition where P=MC=SRATC=LRATC. Economics profit is zero, firms are producing the quantity of output at which price is equal to marginal cost, and no firm has an incentive to change its plan size

Front 14

productive efficiency

Back 14

The situation when a form produces its output at the lowest possible per-unit cost (lowest ATC)

Front 15

long-run (industry) Supply (LRS)Curve

Back 15

graph representation of the quantities of output that the industry is prepared to supply at different prices after the entry and exit of firms are completed

Front 16

Constant-cost Industry

Back 16

an industry in which average total cost do not change as (industry) output increases or decreases when firms enter or exit the industry, respectively

Front 17

increasing-cost industry

Back 17

An industry in which average total cost increase as output increases and decrease as output decreases when firms enter and exit the industry, respectively

Front 18

Decreasing-Cost Industry

Back 18

An industry in which average total cost decrease as output increases and increase as output decreases when firms enter and exit industry, respectively

Front 19

profits from two perspectives

Back 19

1- profits serves as an incentive for individual to produce

2- signal

Front 20

1-INCENTIVE

Back 20

services as incentive by promoting or encouraging certain behavior

Front 21

2- signal

Back 21

profits acts a little like a neon sign, identifying where the resources are most welcome